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PVH Sticks With Guidance Despite China Store Closings Due to Coronavirus

PVH's Calvin Klein and Tommy Hilfiger stores in China have been closed because of the coronavirus outbreak.
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Apparel company PVH (PVH) - Get Free Report stuck to its fourth-quarter earnings guidance Wednesday even though most of its Calvin Klein and Tommy Hilfiger stores in China have been closed due to the coronavirus outbreak.

Shares of the New York-based company were climbing 4.1% to $89.67.

In addition to the store closings, which affect both company-operated and franchised outlets, PVH said "the stores that are open are operating for limited hours and are experiencing significantly lower than planned traffic and sales trends."

However, PVH reaffirmed its earlier profit guidance for the fourth quarter of at least $1.79 a share, and for the fiscal year of at least $9.45 a share. The FactSet consensus is for fourth-quarter earnings of $1.81 a share and fiscal-year profit of $9.47.

PVH said it believes that it would have exceeded its non-GAAP earnings guidance had the coronavirus outbreak not occurred during the last two weeks of its fiscal year.

“While the coronavirus will impact our businesses in the near-term, our long-term growth opportunities across the region are significant," Emanuel Chirico, chairman and CEO, said in a statement. "Given our diversified, global business model and the strength of our iconic brands, we are well-positioned to manage this period of uncertainty."

The company said Greater China is expected to account for about 7% of 2019 revenue and the Asia Pacific region is expected to account for about 16% of 2019 revenue. Roughly  20% of the company’s global sourcing is derived from China, including about 10% of sourcing inbound to the U.S.

PVH said it currently expects its fourth-quarter and fiscal-year earnings on a GAAP basis will be lower than earlier guidance due to an actuarial loss expected to be recognized on its retirement plans in the fourth quarter of 2019, primarily resulting from a decrease in the discount rate in the latter part of January 2020.